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How Many Credit Cards Should I Have - Coast Tradelines

Dec 19

How Much Credit Cards Should I Have? The Intersection of Credit Cards and Tradelines Explained


One of the most enigmatizing questions for people when it comes to personal finance is "How many credit card should I get?" This question becomes more important when you are thinking about adding tradelines to your credit score. Let's dispel this nagging issue to provide you with the necessary information and the path to take confident financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry is not just something that you can do for personal convenience. It also influences your credit score. While you know that having credit cards can boost your credit score, you're probably perplexed about how many you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we dive into the number of credit cards you're supposed to have before we look at the advantages and disadvantages of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got multiple credit cards your credit limit will be greater. A credit limit of high amount is handy for emergencies or large purchases.
  • Use credit card rewards as well as cashback to save on things on a daily basis.
  • Your ratio of credit utilization is likely to increase. Your credit utilization ratio is related to the amount of available credit that you currently use. Utilizing multiple credit cards may boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make it more likely to overspend, and eventually fall into debt.
  • It's easy for people to make unplanned purchases that you aren't able to afford when you're juggling multiple credit cards.
  • Controlling multiple credit cards can require an amount of time and effort. It is even more difficult if the payment schedules are different.
  • The addition of more cards can result in higher credit utilization. A high CUR can negatively impact your credit score.
  • Different cards provide different perks. Being too cautious with your cards can result in losing out on a variety of benefits.
  • On the other hand having too many credit cards can make keeping track of payments due dates a challenge. It can result to high interest and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits: Look for cards that provide various perks, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Be sure that the card's benefits surpass the annual fee.
  3. Interest Rates: It is important unless you're confident that you'll be able to pay off the balance every month.
  4. Credit Limit: A higher credit limit could improve your credit utilization rate, if you don't exceed it.

Average Number Credit Cards Should I Have

After looking at the benefits and disadvantages of owning multiple credit cards let's explore how many credit cards you should be carrying. What is excessive, and how many are sufficient?

Financial experts suggest having 3 to five credit cards to create a well-rounded credit history. This offers a variety of benefits and can help improve the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Numerous factors should be taken into account when deciding how many credit cards to hold. These factors include:

  • The credit score and the history Your credit score as well as your past experience will determine how many credit cards to get. You are only eligible on one or two credit lines if you have poor credit scores or have a poor credit record.
  • The amount of your expenses and income will also be crucial. If you're blessed with a higher income and minimal expenses, you might manage more credit card payments than those with lower incomes and more expenses.
  • Priorities and financial goals Priorities and financial goals will also affect how many credit cards you should possess. If you're trying to improve your credit score or earn rewards consider having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some suggested numbers of credit cards based upon different scenarios:

  • For those with no credit history: If you don't have a credit history, you could be eligible for one or two credit cards.
  • For those with average credit scores: If your credit score is average, you may have a range of two to three credit cards.
  • For people with excellent credit scores: If you have excellent credit you may have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've discussed how many credit cards should you have we can look into how using multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can improve your credit score, in a variety ways such as:

  • Increased credit utilization ratio Owning multiple credit cards can aid in improving your CUR. The spreads the balances on multiple cards.
  • Diversified credit mix: A diversified credit mix can help improve your credit score.

Negative Impact of Owning Multiple Credit Cards on Credit Score

A number of credit cards on your account can negatively impact your credit score the following ways

    • Increased risk of missing payments and delinquencies: Having many credit cards may result in a higher risk of missing payments. There is also the risk of becoming delinquent to your credit card accounts.
    • New and increased credit inquiries as well as new accounts Credit card applications for multiple cards can result in multiple credit queries as well as new accounts. Both of these can affect your credit score.
    • Lower average age of your account A variety of credit cards can lower the average age of your accounts. As a result, it could lower your credit score.
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